Empowering SMEs for Future Growth

Innovate UK’s Innovation Loan programme is aimed at supporting micro, small, and medium-sized enterprises (SMEs) with late-stage research and development (R&D) projects that demonstrate high innovation potential and significant future economic impact. This initiative provides up to £25 million in loans to help these businesses bridge the gap between R&D and commercialisation.

Overview of the Programme

The Innovation Loan programme is designed for SMEs registered in the UK, focusing on projects that are significantly ahead of current market offerings or utilise existing products, processes, or services in innovative ways. The loans range from £100,000 to £2 million, with the expectation that projects will commence by April 1, 2025. The programme aims to support a variety of sectors, emphasising themes such as Net Zero, health and wellbeing, next-generation digital technologies, and advanced manufacturing.

Eligibility Criteria

To qualify for the loan, businesses must:

  • Be a UK-registered micro, small, or medium-sized enterprise.
  • Conduct and exploit their project within the UK.
  • Demonstrate the need for public funding and the ability to repay the loan on time.
  • Provide evidence of their business’s suitability to handle a loan.

Notably, individuals, large companies, non-profits, academic institutions, and research organisations are not eligible. Collaboration is not funded, but subcontractors are allowed, if justified.

Project Requirements

Eligible projects should:

  • Lead to the development of innovative new products, processes, or services.
  • Include prototyping, demonstrating, piloting, testing, or validation in real-life conditions.
  • Align with one or more future economy areas specified in Innovate UK’s plan for action.

The programme encourages applications from underrepresented communities, including those outside major investment hubs and from diverse backgrounds.

Application Process

The application process is comprehensive, consisting of three main sections: business and financial details, project questions, and project finances. The application is evaluated based on the quality of the project and the business’s ability to manage and repay the loan.

Applicants must also address specific project aspects, including:

  • The business need, technological challenge, or market opportunity.
  • The market potential and commercialisation plan.
  • The team’s skills and project management strategy.
  • Detailed project costs and financial planning.

Submissions are reviewed by independent experts and Innovate UK’s credit team. Successful applicants will proceed to detailed credit analysis and final lending decisions.

Key Dates

The programme operates through multiple rounds:

  • Round 16: Opens on 27th June 2024, and closes on 21st August 2024.
  • Round 17: Opens on 22nd August 2024, and closes on 2nd October 2024.
  • Round 18: Opens on 3rd October 2024, and closes on 3rd December 2024.
  • Round 19: Opens on 3rd December 2024, and closes on 29th January 2025.

Financial Terms

Innovation loans are structured with favourable terms:

  • Availability Period: Up to three years with loan drawdowns and interest at 3.7% per annum.
  • Extension Period: Up to two years, focusing on commercialisation with deferred interest.
  • Repayment Period: Up to five years with quarterly repayments and a 7.4% interest rate.

Security is generally in the form of a debenture, with no personal guarantees required. Loans cover up to 100% of eligible project costs, with the equivalent benefit of a grant due to below-market interest rates.

What Next?

For a free consultation to discuss your project, contact RedKnight today.